CTA Case No. 4461 (Decision)

REPUBLIC OF THE PHILIPPINES COURT OF TAX APPEALS QUEZON CITY PH I LIPPI NE FUND, INCORP ORATED , P e t i t i onet' , - versus - C . T . A . CASE NO. 446 1 COMMISSIONER OF INTERNAL REVENUE, Re spondent . X- - - - ------X DECISION T 11 i s i s c I a i rn f o t' a t a x I' e f u n d o r i s s u a n c e of a t a x credit certificate in th e amount of P2,264,839.27 r e p r e s e n t i n g t 11 e a I I e g e d o v e t' p a i d f i n a I t a x w i t h h e I d o n interest in come for- tile per i od from May 1988 to May 1989. Petiti oner , a non - r�es i dent corporation, pur-chased Central Bank Special Series 15i lis (CBSSB's) with a total face value of P2,5 42,90 0 ,000.00 during the period from Ma y 31, 1988 to May 2 , 1989. The Centra I Bank of the Phi I i pp i nes deducted � and w i t 11 h e I d f t' om t h e t o t a I i n t e r� e s t o f P 4 5 , 2 9 6 , 7 8 5 . 1 0 t h e 20% final withho lding tax amounting to P9,059,357 .0 3, computed as fo I I ows: 356

DECISION - C.T.A. CAS E NO. 4461 -2- Date Purchased Flee Amount Interest 20\ WIT 31 r~ay '8 8 P301,soo,ooo.oo r10 , 199,457.96 P2,039 , 891 .59 I 13,991 I 2,115 , 753.82 29 Aug . '86 310 ,300 ,000. 00 28 Nov . '88 313 , 600 , 000 .00 10,576,769.08 818 , 852 . 45 29 Dec. '8 8 317,200 ,000.00 I 13. 96 31 901 , 828 . 23 30 Jan. '8 9 320,200,000 . 00 4,094,262.26 750,716 . 39 �1 flar. '89 323,300,000.00 ( 15' 362) 773 , 295.32 4,509,141.16 836,621.68 31 ~:ar '89 326 , 600 ,000. 00 ( 16' 2231 822 , 397 . 54 2 May '89 329 , 900 , 000 . 00 3,753 , 581.93 P9,059,357.02 ( 14 '23 4) 3,866 , 476.61 (14 ' 525) 4,183 , 108 . 40 I 14 . 596 I 4, 111,987.70 ( 15' 14 6) A I I e g i n g t 11 at t 11 e corp or at i on i s not s u b j e c t t o 2 0% but only to 15% final ta x , petitioner is now c l ai mi ng that it should be held I iable only for the amount of P6,794,517.76, as co mput e d hereunder: Dat e Purchased Fa ce Amount Interest 15% WIT 31 May '88 P301 , BOO,OOO.OO P10,199,437.96 ?1,529,918.69 (13 ' 991) 1, 586 ,815.36 29 Aug. '88 310, 300 , 000 . 00 10 , 578 , 769 .08 614 , 139 . 34 28�Nov . ' 86 313,600,000 .00 ( 13' 96 3) 676 , 371 ' 17 4,094,26 2. 26 563.037.29 29 Dec. '88 317 , 200 , 000 .00 I15.36 21 579 , 971 . 49 4,509,141.18 627 , 466.26 JO Jan. � �sg 320,200 , 000 .00 (16 . 223) 616 , 798.16 P6,794,517. 76 ~ar. '89 323 , 300 ,00 0.00 3,753 , 58 1. 98 (14 . 234) 31 Mar. ' 89 326 , 600 , 000.00 329 ,90 0, 000 .00 3,866,476.61 I (14. 5251 4, 183,108 . 40 2 May ' 89 ( 14. 5961 4,111,98 7. 10 ( 15. 14 61 35 7

DECISION - C.T . A. CAS E NO . 4 461 - 3- On August 4, 1 989, pet i t ioner' f i l e d i t s r-eques t for t a x r e f u n d o t' t a x c r e d i t o f tl1e amo unt of P2,264,839 . 27 c o ~� I' e s p o 11 cl i n g t o t 11 e d i f f e r e n c e b et we e n 2 0 96 a n d 1 5 96 f i n a I t a x o n i n t e r e s t i n c o rn e a s s 11 o VI n i n t 11e c o rn p u t a t i o n be I ow : 20�o T ax P9,059,357.02 - P6 ,794,517.76 15�~ Ta x P2,264,839 . 26 Ove rpayment Tile responden t Cornrn i ss i o n e r- o f Int er n al Revenue - failed to act on petitioner- 's request prompting the I a t t e r t o f i I e t 11 e i n s t a n t p e t i t i o n f o r r e v i e w . Th e s o I e i s s u e f o r- t 11 i s Co u r t ' s d e t e r rn i n at i o n is wl1ether� or� not peti tione r is ent i tled to a tax re fund or credit in t 11 e a rno u n t of P2,264,839.27 r- eprese ntin g alleged ove r- p a i d final ta x wit htl eld o n interest income. Articl e 1 2(2 ) of the RP - US Ta x T rea ty provides: "Int er- est deriv ed by a res id e nt of one of the Contracting States fr orn sources wi thin the other Contract ing State s hal I not be tax e d by th e other c ontracting sta te a t a rate in exc ess of 15 % of the gro ss amount of s uch interest." Respo ndent 's denial o f t 11 e c I a i rn for refund or tax cr� e dit i s based o n p os i t i OII t 11 at petitioner rn a i 11 t a i 11 e d a p e r rn a 11 e 1~ t e s t a b I i s h rn e n t i n t 11 e P 11 i I i p p i n e s . Pertin e nt prov i s i ons o f paragraph 5 o f Article 12 of t 11 e sa 111 e r ax .T t' ea t y read as f o I I ow s : " P a r� a g 1 a p h s ( 2 ) ( 3 ) a n d ( 4 ) s h a I I n o t app 1y i f the r� ec i pi ent o f i trterest ft � om sources w itl1in o 11 e of t il e Co11tra c ti11g St at es , being a r es ident o f t il e otl1er� Co nll' actiny S late carries 358

DECISION - C.T.A. CASE NO. 4461 - 4_ - on busines s i n the fir s t me nt io ned Contracting St a t e s , t h I" o u g 11 a p e r ma n e n t e s t a b I i s 11111 e n t s i t u a t e cl t 11 e I' e i n o r p e r f o r rn s i n t h a t o t h e I' State ind ependen t p e r so nal se rvice s fr om a �f i x e L1 b a s e s i t u a t e cl t 11 e I' e i r1 a n d t h e cl e b t c I a i 111 i n I' e s p e c t of w11 i c 11 t 11 e i n t e r e s t i s p a i d i s effectively connected with suc h permanent establishment of fi xed base. In s uch a case, t 11 e p I' o v i s i o n of A r t i c I e 8 ( B u s i n e s s P r o �f i t s l or Art i c I e 15 (Independent Per so na I Services) as. t 11e case rna y be , s h a I I a p p I y . " Pa r a g rap 11 s 4 ( a ) an d 5 of Artic l e 5 of RP-US T ax Tr- eat y , 011 t h e conc e pt of " pet ' man e n t es tablishment", pr ov id es : "4 . A person ~cting � in one of the Co n t r a c t i n g S t a t e s o n be 11 a I f o f a r e s i cl e n t o f t 11 e o t 11 e t' Co n t r a c t i n g S t a t e , o t 11e r t h a n a n ag en t of an independ e nt status t o whom p a I' a g r a p 11 ( 5 l a p p I i e s , s 11 a I I b e d e em e d t o g i v e t' i se to a pe r ma n ent es tab I i s hment in the first - menti oned CDntra c ting State i f - <a l S u c 11 per s o n 11as, and 11 a b i t u a I I y exer c i sed in th e fir s t -men tioned Contracting Stat e, an autho rity t o co nclude contracts in the nam e of that res i den!, unles s th e exerc i se o �f s u c 11 aut hor i t y i s I i nr i t ed t o the pur chase o t good s and merc h a ndi se f or that t' es i dent. " (under-sco ring supp l i ed l 5. A r- es id en t o f one o f the Cant rac t i ng States shall not b e deemed to have a permanent es t ab l i shrne nt in th e o_!he r- Contracting State me t' e I y � b e c a u s e s u c II I' e s i c! e 11t c a r� r i e s on IJ us i n ess i n t 11 at o t 11 e r Con t r act i n g State t 11r o u g 11 a b r o I<e I' , g e n e I' a I c o rn rn i s s i o n a g e n t , o r a n y o t 1�1e r a g e n t o �f a n i n d e p e n d e n t s t a t u s , w h e r e s u c 11 b r� o k ~ t' o r a g e n t i s a c t i n g i n t h e o I' d i n a r y cour se of his bu s in ess . Howeve r� , when th e a c t i v i L i e s of s u c 11 an agent a r� e d evo t e d who I I y or a lm o s t vt l1o I I y on b e h a_ I f of tha t res i dent , 11e s 11 a I I n o t be c o n s i d e r� e d a n agent o �f ind e pendent s tat us w i t h i n t h e 111 e a n i 11 g o f t h i s p a r a g r a p 11 , i f th e tl' ansact i OII S between the agent and tl1e 359

DECISION - C.T.A. CASE NO. 4461 - 5- r c s i d e nl \'! 0 r e n o t Ill a d e u n d e r a r m ' s length co 11cf i t i o n . ( U 11 d c r s cor- i 11 g fo r em ph as i s ) XXX XXX x xx " I n 11 e r t.1 e 111 o r n n d u m ( C � T � 1\ . necords, pp. 131-132) , r� e s p o n d e n t t 11u s e x p I a i n e d : " I t i s lil~ ev1i se V/ o rtlly to note, as earlier sta ted , that petitioner� is 100% indi rec t l y o v1n e cf by Sec u r i t y r a c i f i c Nat i on a I Ban I< w he re i n Gu i a 0 . He r n a n d e z , t 11c 1\ t t o r n e y - i n F a c t o f 11c r� o i n p e t i t i o n e I' , i s a n em p I o y e e a n d i s 11o I d i n g o f f i c e f o r� t 11 e p e t i t i o n e r i n c o n n e c t i o n ,., i t 11 t 11e a f o r e s t a t e d s o I e b u s i n e s s a c t i v i t y i n t 11 c r h i I i p p i n e s . f,l o r� c ovc r- , i t is a ba s i c c o ns i dera t i on i 11 t 11 e a p p I i c a t i o n o f t a x t r e a t i e s , i n t 11 e i n s t a n t c a s e , n P -- U S T a x T t' e a t y , t 11 a t t 11 e I' e c i p i e n t o f t 11 c i n c o 111 e ( i 11 t e I' e s t i n c o me > d e r i v e d f r o m t 11 e C o 11 t r a c t i n g S t a t e , {) e a r e s i d e 11 t o 1� t 11e o t 11 e I' C o n t I' a c t i n g S t a t e . I n t 11 e i n s t a n t c a s e , n o i 11t e r c s t i n c o 111 e d e r i v e d by p e t i t i o n e r f r om i t s C e n t I' a I B a n k S p e c i a I S e r i e s 8 i I I s 11 o I d i 11 g s i 11 t 11 e P 11 i I i p p i n e s 1 a ::; e v e r I' e 111 i t t e cl t o p e t i t i o n e r in De laware, U.S.A. corlsidering that such income v1as r-e ceived and reta in ed by pet i ti o n e r ' s p e r�m an e nt estab l is hm en t in the Ph i I i p p i n c s tIl l' o u g 11 i t s agen t G u i a S . He rnandez f o r I' e i n v e s t m e n t s . T 11 i s f a c t i s ad m i t t e d by p e tition e r, t h I' o u g ll i t s I' e p r e s e n t a t i v e , t 11 e S GV a nu Co ., in its l e tter dated June 25 , 1992 (Ex 11 . "3", Respond e nt, p p . 8 4- 86, BIR r e cords) . In fine th er-e for e , sin ce pet i t i onel' 11as a pe r�ma n e nt estab! i s hmen t in the Phi I i pp i n es a nd t 11 r. t t ll e I' e i s no a c t u a I out vt a r d rem i t tan c e of t� 11e i 11 t e r e s t i n c o 111 e d e r i v e d by p e t i t i o n e I' f r o Ill its Ce 11l1' a l Bank Spec ial Series Bi li s dur ing t li e IJ el ' iuJ unll e r� l' eview, petitior1e 1� herein (; d 11 11 u t 11 a I i d I y i 11 v o I< e l 11 e b e 11 e f i t s u n d e r f., r t i c I e 12 o f R P- US Tax r 1� e a t y as ll1 e bas i s o f r \.) i l s 1,; I ct i Ill I' r� e f u II d . f' r:: 1 I u 1 ...: := , s i 11 0 e l 11 e r i 11 a 1 ~~ i Lllll u 1J i " g laA ,., i Llil1e I J anJ paid by C e 11 l I' a I B a 11 I\ o n p e L 1 l. 1 u 11 e 1 s a f� u I' e s d i d in te1 � esl i II CO I!Ie was 360

DECI S ION - C.T.A. CA SE NO. 4461 - 6- va I id and p ,, op e r , p c t i t i one r ' s c I a i�rn for refu n cl/ ta x c r'edit in tl1 e ir 1s tant case 11as no bas i s i n t 11e fa c t and i 11 I a vJ, 11e 11 c e , s h o u I d be d e ni eu ." T 11 i s C o u r� t r u I e s f o r t 11e r� e s p o n d e n t . (B. I . n. I t i s t ,- u e t 11 at r e s pond e n t i ss u e d a r� uling R u I i ng 10 3 - 89 ; Ann ex "H" ; C . T. A. Recor d s , p. 60) t 11 at p e t i t i o n e r� i s e n t i t l ed to a p r� e f e r e n t i a I r a t e o f 1 5% f i n a I t a x o n i n t e r e s t d e r i v e d f r� o 111 CB S SB ' s u n d e r� t 11e d e b t t o c q { I i t y c o n v e r s i o n p 1 o v i s i o n o �f C . G . C i r� o u I a r No . I I I . Howe v er, in that r u I i ng, tile question o f permanen t es ta b I i s lllliCnt vas n ot i n i ss u e . Sa id ruling was is sue d a mere ly upon r� e p r� e s e n t a t i o n o f t 11 e p e t i t i o n e r t II t i t is indeed a c o r po r-at i o n o ,, g a n i z e d a n d e x i s t i n g under� th e l aws of 0 tat e of De l awa r� e , U. S . A . No 111 e n t i o n wa s ma d e a s to i t s bu s in ess act ivity in th e Pl1 ilippin es . Fur- therm o r-e , i t i s a we i 1- se t I ed doctrin e t l1at n o t w i t 11 s t a n d i n g r� e s p o n d e n t ' s i ss uanc e _o f a r u I i n g, gove r- nm e nt ca n n ot be es topp ed in co l l ecting t axes . Es t oppc I' does not I i e against the gov er nm e nt . Erroneous app li ca ti o n a nd u n e n f o r� c e 111 e n t o f t li e l aw by pub 'l ic o f f i c i a l s do not b I o c I< s u b s e q u e n t c o r� r e c t a p p I i c a t i o n o f t 11e s t a t u t e a n d t 11 a t t h e g o v e r n 111 e n t is n ever s topped by e r r� o r o r 111 i s t a I~ e o o rn Ill i t t e d b y i t s offi c i a l s (Comm i ssioner of ln t e r�nal R evenue vs. Proctor� and Gamb l e PMC, 160 SCRA G60; Ct uz, Jr. vs . Cou 1� t of Appea l s , 19 4 SC RA 145) 361

DECISION - C.T.A. CASE NO. 4461 - 7- r e t i t i o n 1 v1o u I d I i I<e t 11 i s Co u r t t o be I i eve t 11 at i t ll 0 p c I' 111 n n e n t e s t a b I i s 11111 e n t in r 11 i i p p i n e s C Q II S i cJ C I' i n Q t ll a t i t s age 11t i n t 11e r 11 i I i p p i n e s i s o f independent s tatus. VI e d o n o l b e I i e v e s o . Pursuant to t ll e r e q u i ~~ e 111 e n t o f p a r a g r a p 11 s (a) and 5 of Articl e 5 o f RP - US T ax Tr ea ty, you may b e co nsid e red a s having a p c r 111 n n e n t e s t a b I i s 11111 e n t i f t 11 e I' e i s a p e r s o n a c t i n g i n o n e o "f c o n t I' a c t i n g s tat es on b e ll a If o f a resi den t o f th e o t h e I' c o n t r a c t i n g s t a t e a n d s u c 11 p e I' s o n h a s 11a b i t u a I I y el':erc i s ed a11 aut!1o1~ i ty to con e I ud e contracts in the narne o f that res i den t. This situation w ill n ot apply i f such r ep r esent at i v e. i s a b r o I<e 1~ , g c n e I' a I comm i ss i on agent or an y o t ll e 1 a g e n t o f a 11 i n d e p e n d e n t s t a t u s , \'/ 11 e I' e s u c h b I' o I<e I' o I' a g e n t i s a c t i n g i n t 11 e o I' d i n a r y c o u I' s e o f 11 i s f)US i nes s. Tl1c agent s l1a I I 11ot be co n s i derecl ind ependen t i f t 11e act i v i t i e s o �f s u c 11 agent a I' e d evoted w11 o I I y or a 1111 o s t \'t tl o I I y on b e 11 a I f o f t 11 at res i d e nt . L e t u s exami n e tt1e fac t s of the case a s s l10w n from til e recut ds . P e t i t i o 11 e I' o 11 fvl a y I 7 , I 9 8 9 a p p o i n t e d R o b e r t R. Davi s , nudo lf o C. Orclo na and Guia S . Hernandez in t 11 c i r i 11 d i v i cl u a I c a p a c i t y a s a g e 11 t a n ct a t t u r 11 e y - i n - f a c t <Ex l 1. II? It) �: I n accord an ce wit h ll18 said povter of manag e ~ a t l o r 11 e y , L l1 e s a i d a g e n t s a r e ~..: lit p owe r e cl t o ( 1 ) t 11 e f u n d ' s asse t s , b a c I\ a c co u 11 l s a 11 d i 11v e s L111 e 11 L s o I' t 11 e 36 2

DECISION - C.T.A. CASE NO. 4461 - 8- petiti cnc'r (2) co nverting th e fund's assets into eq uity i nv es t m en t~ . I n connectio n w it h tl1e sa id functions, tl1e <:! t t or 11c y ::; or any one o f t il e Ill a I' e aut h or i zed t o execute d o c u 111 e 11 l s , p I' ov id e n otices a nd regist er doc uments on b c !1 a I f o f t 11e fund . One o f the ag e nts, Ms . Guia S . HCI' Ilancl c.: tes t i f i ecl 011 August 2 1 1991 that sl1e is the A ssistant V i ce- President for Credit and Marke ting De partm en t o f Sec u I' i t y Pac i �fi c Nationa l Bank. As 1\ s s i s t a n t V i c e - P r e s i d e n t s h e I' u n s t 11 e c r e d i t d e p a r t me n t and ma 1� I<c t t 11 e ban I< s s e I' v i c e s . In addition s~e was a l so d e s i g n a t e cl t o a d 111 i n i s t e I' a n d 111 a n a g e t 11e a s s e t s o f t h e P l1 i i ppinc fund, In c . r .I c a s e 11 o t e t hat pet i t i one r , Phili ppil1e Fu11d i s v1 h o I I y own e d by s e c u ~~ i t y r a c i f i c 0 v e I' sea s co I' p o r at i on w11 i c h in turn is a wh o lly owned s u b s i d i a I' y o r S e c u I' i t y Pa c i f i c Na t i o n a I B a n I< , a n of f s h o r e b 8 n I< i n g u n i t o p e I' a t i n g i n t 11 e P 11 i I i p p i n e s ( E x h s . " 1 - C " and " 4", pp. 9 0,92 a11d 93 Gin Fl ccordsl . r 11 LJ s t 11 e age n t s rep r e se nt i 11 g t h e pe t i t i o n e r a r e w i t 11 a u t 11o I' i t y t u c o n c I u d e c u n t r a c t s a s t 11e y a r e s p e c i 'f i c a I �I y i.HJ l ii UI i ._eel l u exec ut e . docum e nts u n der th e pow e r o f allo 111e y and tl1erefo1 � e co u I d qua I i fy as a p e I' Ill a n e n t es t a lJ I i ~ 11111 e 11 l . ll1ey coul u nul qualify a s an independe nt d\J8 1ll. 1i1i <> l,;UU I ' t I.J e l ieves tr1at tl1 e a[,Je11ts re'fer� red to 111 li1e LdA Ll � e dly a r e Lhose in til e sa 111e categ ory a s 363

DECISION - C.T.A. CASE NO. 4461 - 9- c o mm i s s i o n .1 g ~ n t o r b t' o 11e t' . T hi s i s i 11 acco r- da n ce w i t h t lw p r i n c i p I c o f e j u s de 111 g e n e r i s . Unde r- tl1 i s prin c ipl e on s Cl t u tor y can:::; t t' u c t i on w11 e I' e gene r a I t e r 111 s f o I I ow t h e cl c s i g 11 a t i o 11 o f p a t' t i c u I a t' t 11 i n g s o r- c I a s s e s o f p e r s o n s o r sub j oct ~ , t 11 e (J c ne t' a I l e 1� ills '. t i I I be co n s t r u e d to i n c I u de t 11 o s e l: l1 i '' !J ::; o 1- p e r� s o n o r t. 11 e s a me c I a s s o f t h e s a rn e n.:1tur� o t 11C) s c S fJf~G i fica l l y e nu merated (H andboo k on S t a t u t u r y c o 11 s t r u c t i o 11 b y n u p e r t o G . r.1a r t i n , 1 9 7 3 e d . p . 7C'). 1 11 i s co n c.: I u s i o 11 i s s up p o I' t e d by t h e f act t h at t ~~ e t r e a t y p 1� o v i :::, i o 11 t' e q u i I' e s ll1 i s a g c n t t o be " a c t i n g i n t 11e c r d i 11 a r y c u u 1� s e u r 11 i s iJ u s i 11 e s s " . S o t 11 e b u s i n e s s o f t 11 i s p e I' s o n <H e n ;t i t y a t' e c o llltll i s s i o n a g e n t o r b r o I< e r a n d t l1e y a r� e act i rrg as s u cl1 to l l 1e \:j enera I pub I i c . Th e agents of t l1e petit i on e r� i11 uu1 � ca s e co ul d n ot qua l i f y as an agent of ind e pend ent sta tu s co ns i Jeri ng t 11 at t h e y a r e employees of a bdnkill\J in s titution wl1ose duties are e nt i 1 e I y d if f ero nt f o 1�nr Lir e assigned tasl< as age n t o f t l1 e r o I' i n stance , f.l1 s . II e 1 11and e z t' u n s t h e c t' e d i t a 11 d 111 d 1 f.. o L i 11 !:J de fJ a 1 ltn e 11 L o r L 11 (.:: IJ .1 11I< . S 11e a J 111 i t t c d t 11a t li 1L: ddtllilli~Lialiu t l of tile assets o f t h e p e t i t i oner' i s a n Cldd i l i lJII dl fut 1<..: lion atrJ i rr f:.1 c l si r e is des ig nated th ere i 11 II e 1 it 1Jiv i J u al t.::afJaG ily. ~I 1e i s n e i t1'1e r i.l co 11 1111 i s s i on agent act ing i n t he IJ UIS U iL ul ::,u�.;l l b u s i 11ess . rile . i ll depenJenc y is eve n 364

DECI S ION - C.T.A . CASE NO . 4461 - 10 - '� Cjues t i o nab l e i 11a SlllUC I1 as t 11 e co mp a ny where she is e mp I oycd i ncl i t'cc t I y owned 1 OOqo o f p e t i t i o ner . Grantin g t 11 a t s 11 e i s e1 11 i 11 d e 1J e n cl e n t a g e n t , i t a p p e a r s t h a t 11 e r a c t i v i l i C) s n s 3 11 a g e 1\t a r e d e v o t e d w11o I I y o r a I mo s t \i ll u l l v 011 u e half o f ti1::~ L 1 es i d f:? nl and as e x plain ed in tl1e 11 ('~ t p3 1'3\J I ap l1 Ll1 c t1 311:.;.1ct i o n betwee11 the agent and the petit i on-�r docs n ot see m t o be under arm's length GUi ld it i U ll. 1'!1 e r e Fu I' e , s 11c co u I cl not be con s i de t' e d as a n a g e n t v1 i l 11 i n d c p e n d e n t s t a t u s p u r s u a n t t o A r t i c I e 5 o f t 11 e sa i cl l. a ;'. l i c: c:t L1 . It is \JOI'tl1y to note tl1at tl1e special p ower of att u 111 C)/ cx.ec utell by til e petition er in favor of its agent �h a s a I I' e a d y e x p i 1 c d o t1 D e c e m b e r 3 1 , 1 9 8 9 ( E x 11 i b i t " J " , C .T. A . necu 1 ds, p . oG) . Pe titioner� did not ex pla in to t 11 e s a t i s f a c t i o n o f t 11 i s Co u I' t w11 y i t s a g e n t s t i I I h o I d s 0 11 tu tl1e i11t e1est income 1� cce i ved in its bel1alf despite tht:: ex pi ra ti o n o f tl1 e GO ntl' act o f agency . Since no ru!n i Lta11l:C. 11 as eve 1 111ade tu tl 1e fo1� e i gn cu 1� p ora t ion , i t 0111 y f-.~ruves t 11 a t i nd e~:: d p e t i t i o n e I' lld S p e I' 111 a n e n t iII es lab! i S IIHie'nl ll1 e r)11 i I iJJI.Ji iJes V/ll i C 11 ma I< e s it u n :. 1u a I : f i c Ll lu <.I Vai o r ll1 e IJI e f' e I e1 1t i a I rate o �f 1 5!'c. as p 1 u " i d l' u i '-' 1 u 11 d l"! 1 t I1e ft P- US I a ,, T 1 e a t y . r d A i l~ r u II J p d I ' L d I\ e s u r lli e II i:i L u r� e u f d t a )1.. e X e llli.J t. i () n d 11 d ll 1e 1 e 1 u 1 e (.; a 1111 u l iJ e a I I u ~v e J u 11 I e s s g I' a t1 t e d i 11 t 11 e 365

DECISION - C.T.A. CASE NO. 4461 - 11 - mos t exp I i ci t and cat e gor i c a I I anguage. The grant of I' e f u n d p I' i v i I e g e s mu s t b 0 s t r i c t I y c o n s t r u e d a g a i n s t t h e t ax pay e r. (Insular Lumber Co. vs. Court o �f Tax Ap p ea ls, 104 SC R/\ I10; Commissioner of Internal Revenue vs . Rio Tuba Ni c l<cl Min ing Cor� porat i on, 20I SCRA 549) WIIEREFOrlE, in v i ew of aII th e f oregoi ng co n sidera ti clrs , til e in s tant petition for review is h ereb y d e n i c cl �f o r� I .1 c I\ o f rn e r� i t . so onDEnED. Oue=on City, r.1etro Uani Ia, Uay 13, 19 94 . ~~-G?-.-JL ER NESTO D. ACOSTA Pr es iding Judg e WE CONCUR: t0uLK. GRUBA ' Associate Judg e nAiUN 0 . 0[ VEYRA As::>o<.Jidte JuLlge (u Jr leaveJ 366

DECISION - C.T.A. CASE NO. 4461 - 12 - CERTIFICATION lr e I' e by c o r t i Fy t 11a t t 11 c cl e c i s i o 11 wa s r e a c 11e d a f t e r due con s u I tat i o n <11110ng tl1c lllembers of the Court of Ta x A pp c a I s i 11 a l.. c o I' d a n c c "' i t 11 S e c t i o 11 1 3 , Artic l e V III of t 11 e C o n s t i t 1~ t i o n . ~&Q&~ ERNESTO 0. ACOSTA P I' e s i d i n g J u d g e Court of Ta x Appea ls 367